As discussed last week, the federal estate tax is not the only tax to consider when planning your estate. New Jersey also levies an estate tax, as well as a tax on certain assets that are passed on after death. This second tax is referred to as an inheritance tax.
The New Jersey Inheritance Tax
The New Jersey Inheritance Tax does not apply to all inherited assets, but depends instead on who those assets are being passed on to and how much those pieces of the estate are worth.
Say that you are involved in Big Brothers Big Sisters, and you would like to pass some things on to your “little brother.” If the property you transfer is valued at $500 or more, it will be subject to the tax on inheritance.
The tax operates on a graduated rate, so the percentage would be different if you passed on $10,000 than it would if you passed on $1,000.
The Inheritance Tax, however, does not apply to immediate family members. For example, say you wished to pass on your entire estate to your spouse. He or she would not be held accountable for paying tax on that transfer of property.
This exception applies to surviving spouses, parents, grandparents, children, stepchildren, and grandchildren. Money, property and any other assets passed onto these individuals will not be eligible for New Jersey’s inheritance tax.
- New Jersey Department of the Treasury